at some point we need a deal that will avert what i think would be very disastrous outcome. i hope that happens before the end of the year, but it's going to involve the president coming to the table and be willing to negotiate on spending. >> i see the future. the president lets us go over and then proposes a tax cut for the lower 98%. >> could you vote against it? >> he could do that for the two -- the two top rates is $400 billion. but he's got to do something on spending to address the problem. >> thank you, senator, for your time. right now it's time for "squawk on the street." good monday morning. welcome to "squawk on the street." we're here at the new york stock exchange. let's get a check on how we're setting up for the first trading session of the week. we certainly have a lot to chew on over the weekend with the sunday talk shows, focusing on the fiscal cliff.

it looks like we're looking at a lower open for the dow. as for the action in europe, really, the action focuses on italy where there's an impending political regime change. more on that in just a moment. the road map starts at the golden arches. mcdonald's blowing out expectations for november sales after the dismal drop in the month of october. hoping to fuel the rise, the bacon/onion/cheddar sandwich. >> there's one thing for certain, taxes on top earners are going up. >> turmoil in italy. berlusconi throws his hat in the ring. retail sales numbers out of china, hoping the economy is in fact on an upswing. >> apple, enthusiasm. jeffreys trimming its price target to 800 from 900, as apple shares do trade lower in the pre-market. we'll start with mcdonald's,

posting better than expected november same-store sales, global comps up 2.4. u.s. same-store sales up 2.5, offered by breakfast offerings, including that cheddar/bacon/onion sandwich, as melissa mentioned. jim? people are saying the u.s. maybe is making a turn here. >> i find mcdonald's is levered to new products, levered to menu technology. they do invent things. my hat's off to janet. they had this number last week. reminds people, again, they've been right down, and up. mcdonald's is one of those things where joe asked me from squawk when we were talking, i said, i think this is a for real term. if they continue to innovate. i may this may not be your cup

of tea, burger, but innovation s higher. >> they tried to sell it to consumers as opposed to their extra value menu, which is a little bit higher price point. that combined with these product innovations, they're very cognizant of margins when they're trying to push iced mixed drinks. the sandwich -- which i've not tried. >> you said cheddar/baconburger. >> it looks like they're going to remain modest at best. margins are going to be a bigger piece. i think adjusted for the number of days in the month, the numbers were a little more modest. 1.3, something like that. still a beat above expectations. >> there had been a fear once they start posting calorie numbers, that people would blanche. and take a look and say, i can't have that. i think that this is now empirical that people don't care. i don't know where this thing

comes in, but this is not something that they should put lipitor right next to these. a horrible stat. >> you know what, zocor at a mild dose -- either that, or you say, this sucks the plaque out of your heart if you eat it. a plaque sucker. >> to what extent can we extrapolate that things have turned at mcdonald's? perhaps not necessarily a sign that it's off to the races. >> i think that anything that the trend becomes great, right? the trend may be broken. i do think that to get people in the stores, they had a very broken special. this is where you went in, said, wow, it's $1, and no one told me, and it's a windfall. equivalent to when i bought the j. crew jacket last week, wow, i got 30% off. when you get people in the stores and you're not there because of the value meal, that means all these other people are

going to other places. i think this is a victory for them. >> how far do you trust it into the 90s? >> it's got no capital gains this year, versus, say, apple. >> it is coming into that janny notes point on friday, it is coming up under tough comparable sales. going forward, we could see negative numbers. last year, december increase was an increase of 9.8%. so when you compare, it's going to be very difficult. >> remember, the analysts were all negative. >> that's true. >> tomorrow the analysts will come out and say look, while the compares are difficult, one or two will break ranks because they've been so negative. doesn't matter. >> the question is, on the declines, we're saying, you know, maybe it's a wendy's, a burger king gaining traction on mcdonald's ramp higher, you have to wonder who will be squeezed by the mcdonald's promotional activities. and dollar menus even, the

grilled cheddar/bacon/onion sandwich, the mcbites. look at them. fish mcbites. >> a lot of that is corn. i don't know how much. i'll refrain from making an assumption there. >> we should have a road trip where we sample. >> the more calories the better. a big change. >> you can talk mr. low systolic pressure man. >> i've got the 120 over about 75. and i got really low cholesterol. but they've changed the rules. now you've got to keep lowering it in order to reduce the plaque. i think that plk donamcdonald's antidote to that. basically, you don't matter, it's a statement to the cardiologist. it basically says, i don't care what the charts say.

you're a loser. >> i can't justify going and getting that. >> it's a statement. >> let's talk about the fiscal cliff. also on the radar this morning, after president obama and house speaker john boehner both were tight-lipped how the negotiations went. the co-founder of the fix the debt campaign, he was asked about the chances of striking a deal to avoid the cliff. >> it's probably more like a 40% chance we'll actually get it done before the end of the year. probably 25% chance we'll get it done right after the end of the year. and then there's that horrible 35% chance that we'll still go over the cliff and have pure chaos. but i think the chances of getting it done now are better. i think that's what's key. >> be sure to tune in tomorrow for the fiscal cliff coverage live from washington. mission critical, rise above d.c., all day long.

becky quick, jim cramer, maria bartiromo holding their feet to the fire about where they stand on the fiscal cliff and how they'll do their part to rise above partisan politics and reach a deal. now, there are some bowles comments. 40%, yeah, but the odds are much better. they're still 35% chance it will not happen. it's not exactly confidence building. >> not necessarily confidence building. always interesting to me how people can put percentage chances on anything like this. seeing how difficult it is and how the story changes to a certain steextent each day. who knows what's going to happen. >> public care, confidence numbers, spending, any relationship to the fiscal cliff at five. >> i don't know. i just don't know. i think anecdotally, from what i have been able to observe, no. but i can't speak for that. the journal today has the lead stories of consumer spending

starting so slow. and in part, they cite the fiscal cliff. i think if you were out there, you would get answers that would not necessarily describe it correctly. >> it's a shame it's called fiscal cliff. and called radical tax increase. it was meant to cause a recession. the government felt in its infinite wisdom that -- >> you think it's a radical tax increase? >> i think so, yeah. i think you'll notice it in your paycheck for certain. >> that's absolutely for sure. >> your first check, second paycheck, then you get the chaos that bowles mentioned. and the chaos is, wow, i have much less to spend. i didn't know this was coming. alternative minimum tax being the silent killer who really understands how much more they have to pay, check at the end of the year. do the math. >> we saw it in the consumer sentiment numbers, and what it will be when the increases actually go through. most of that decline in

sentiment that we saw on friday was from households earning more than $75,000. a higher income in this survey, households felt it the most, even though it's not here technically. >> one of the more interesting conversations over the weekend was bob corker saying, let's just go ahead, concede to the tax argument, which would flip the entire spotlight onto entitlements, which is what republicans have been trying to get the discussion to be about over the last couple of weeks. >> when you hear about entitlements, why aren't they talking directly, you know, medicare part b koshcosts x, or medicare a, should cost this. the last thing a republican wants to do is say, look, i'm cutting back medicare. so, i mean, if you switch it to entitlements, suddenly everyone has to say, social security goes from 66 to 68. is that what we do? do we means test medicare?

it is so much easier for grover who will be on cnbc, forget the fiscal cliff, i will come after you with both barrels. if you vote tax increase. what's more -- do they want to rise above a tax increase? no. do they want to rise above fiscal cliff? no. what they want it do is not rise above the radar screen of raising taxes. and grover is more powerful than a recession. i asked him point-blank on "meet the press," college chum, look, it doesn't have to be a recession. we cut the entitlements. what are the entitlements that need cutting. and let's get medicare part b off there. what is your plan? no one is speaking about the specifics. because it's third rail. it's just plain third rail. >> medicare is the key, no doubt about it. the rising medical costs and percentage of the budget that that will continue to take up.

it is the key area, when you're looking at spending cuts. >> right. and there's $4 trillion added on during the republican period. much of it for the global war on terror. no one wants to touch -- do people roll back on what you spend on global war on terror? we've got defense cuts, about there's $4 trillion, documented numbers spent to defeat our enemies, who aso is that coming. how do you cut that budget. >> maybe to corporate's point, if you accede to the president on tax hikes, then you shift the debate purely on, okay, we've given, let's focus on the spending side. >> it's dangerous. spending side means -- >> they need to compromise that's actually worthwhile. >> if you raise taxes, you lose in the republican primary, and if you cut benefits, you lose everywhere, no matter republican or democrat. everybody knows that. dic

dicey. >> running for higher taxes? i mean, look, i'm not pro -- i think that frits van paasschen who has a big bet on china, he laid it out. he said we need both. i was listening to cody from honeywell, it's a dangerous position to want both tax increases and entitlement cuts. i hear very few politicians wanting to do that. >> speaking of china, by the way, mostly upbeat data out of china. 10.1% in november, strongest since march. exports rose at a weaker pace. the planned resignation of italian prime minister mario monti weighing on the european markets this morning. he said he will step down as soon as the 2013 budget is approved. that's because berlusconi.

it's been said a couple things this morning, that italy is now the problem child in europe, more than greece, more than spain. but conversely, china, if gdp is coming back, they are in what many consider to be a sweet spot. >> the numbers came out saturday for china. i think italy has been remarkably good. so this was a big game changer. italy had been a part of the good story of european recovery. now it's back. >> all to monti was never intended to be there for the long term. >> sure. >> in fact, he may be leaving a month earlier than originally planned. this should not be a surprise in the larger context. while we may mention berlusconi's name right now, he's not expected to win. >> look, we knew that monti was successful. >> it may be whoever follows him is going to roll some of the

gains that he's had. so-called gains. >> that's going to cause ripples here. look, on saturday night, i said, we're going to have a nice opening. china's good, people know that monti is not really going to hurt italy. i think if china continues the momentum, but the number -- >> the ex sports were less than expected in the month of november. which is a concern. then there's this perverse glass half full, that some data comes in lower, it might fuel the case for stimulus, where there's no stimulus. you have this economy in fact improving, or if not, they'll step in anyway, this new regime. >> the band of good we see periodically when rates are so high, they have a lot more room to maneuver than we have. >> right. >> when we come back this morning, what do barbra streisand and apple have in common? people who are sellers. people who need buyers. >> find out what babs is singing

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shares of apple falling. jeffreys reducing its price to $800 from $900 a share, citing that apple's rate will decelerate further next year. third quarter, fourth quarter estimates the same this year. they think it will be negative marginal leverage, the stocks will likely fall. >> i just don't think that -- you know, i went and reviewed my tax situation with my professionals on friday. i i'm -- no problems appeared to me. capital gains, anything. estate taxes going away. put the real estate into the kids' i mean, these are the litany of the fiscal cliff discussions. they start with capital gains. please take your capital gains.

please take them. what if people have capital gains? what's the stock they own in their individual account? not their i.r.a.? or 401(k)? it's apple. every one of these guys are telling you that. it's the way the discussion starts. people have to understand, that's how it happens. >> and the buyback next year, increase your cost basis, whatever may be trading at that point. there's no loss for investors. there's only the possibility of gain if they're facing a higher tax rate. >> like the special dividends, making it clear they're not interested in that. >> that's right. >> i think -- unless you have a complex tax return, you may not realize that there's this investment advice that flows through from professionals. you don't want to upset them, because they're better than you. they see thousands of clients. you just do it. you don't want to risk the rap. >> and increase taxes against investment returns as well may be motivating some out there for

next year. that does also increase. >> stocks can go up very quickly. >> but what peter is pointing out is the concern that underlies all of this, whether or not this is fueled by tax reasons, the sell-off in apple. the concern here, that he's laying out, is there's going to be decelerating growth next year. there's going to be negative leverage margins next year. these are all bad things for a stock that's been trading on the notion that it is a high growth stock. maybe no longer. that breaks the story. >> that's true. >> i was going over the charts this weekend, and i was amazed, a lot of tech started moving up last week. and for the longest time, apple was going up, and these were going down. microsoft not doing all that well. you'd be surprised how many tech stocks going higher. no profits in those. big profits in apple. >> cramer's been telling you all

morning on this week's stocks. the busiest day of the season for fedex. fueled by a surge in online shopping this holiday season. what it all means for the company as it looks to deliver growth. let's look at futures as we head to this monday morning open. can i help you?

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about in a big way. >> now, this is a company, abercrombie, where every time you get it going, people say, hey, you know what, they're going to do a deal. when you get the kind of chew, a very positive note from bair today, going from hold to buy, now this is the hottest retailer in the country. we have a lot of negatives in retail. it's coming back. don't forget, there's a lot of shorts in this. it takes out this level. i think you're going to see a spike up. be careful if you're short a & f. >> a lot of weird weather patterns in the country. >> now, this is really important. a stock i like very much on the basis of corporates buying them and deckers, ugs were doing better. piper cuts numbers. they're talking about markdowns. this has just been horrendous. right here is where we started catching rumors that this is where vf would buy them. the stock has moved up very

nicely. i think vf is interested because they bought timber land when it was a knockout brand. carl, the weather's playing havoc. i was watching green bay last night and there's snow. i thought, well, if that's what we need. no snow anywhere. >> chicago is wondering where it all is. >> chicago is warm. shirt sleeves. >> maybe some football after the break. what a weekend it was. we'll keep our eye on shares of mcdonald's as well. and later, it's been party time for tupperware shareholders. the stock up sharply in the past two months. we'll talk to the chairman and ceo rich goings during this hour. find out what barbra streisand and apple have in common. and get ready for a new week of trading. opening bell is next.

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he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. less than a mist minute to the opening bell. live from the financial capital of the world. a lot to watch this week on china, got a lot of europe. we're going to be talking some fed, of course, a two-day meeting, press conference on

wednesday. we'll continue to watch. apple and mcdonald's, probably the two companies making the most news stateside. >> disney, mcdonald's, these can offset minds for at least 30 seconds. apple. >> the dow, by the way, coming off a three-day winning streak. same story for the s&p. adding 129 points last week. the dow that is, not the s&p. there's the opening bell. at the big board this morning, ishares celebrating the recent launch of the ishares exchange traded funds. the nasdaq spanish language media company tell emund oh, doing the honors. we're glad to see them ring the bell over there. >> when you see this stuff, time warner, i'm always regarded them

as housing plays. you buy a house, you get debt. but those are great stocks right now. discovery with a big breakout. people love that. >> they do. discovery, you think international largely. that's so much of their growth is due to that. so much of their programming is very easily, can cross borders as opposed to other programming. which is a bit more envisionist than the u.s. important for all these content places. >> that's been a very good one. >> yes. >> david made a good point earlier. covering the journal, consumer spending wobls. front page. yet the leaders this morning, abercrombie, mcdonald's, whole foods, mastercard. something doesn't square, jim. >> that is incredible to point that out. having gone there last week, whole foods, you know, you don't look at prices. >> you haven't been there today? >> you're desperate to go to whole foods.

do you know how hard it is? i had a veggie burger for lunch yesterday. do you know how many times you've got to visit trader joe's -- and it doesn't even have preservatives in it? you can't even keep that stuff. when you have velveeta, they tested that in the war -- >> that's bunker food. >> major. >> tofurkey is the only thing that lasts. it's so good, you put a lot of mustard on it, lettuce, tomato, you have no idea you're eating it. >> and you could eat cardboard, too, jim. >> i will tell you, at the cafeteria at hq, i've never seen so many vegetables. >> he burns more calories before 5:00 a.m. than anybody i know. >> i was so proud, so proud of some of the things i ate this weekend, that are so cardboard-like, it's terrific. but the roast that i got at trader joe's, it tasted so much

like turkey. i defy you to -- >> i think you haven't had meat in a very long time. i think that's fair to say. barnes & noble up 3% this hour. they announced a price decrease, actually, for their nook simple touch ereader. worth pointing out. barnes & noble seeing a nice pop in the session. >> stock acted poorly initially, now it's come back. >> that's all right. >> the nook -- nook's one of those things, we talk about apple a lot. anyone who has a nook, i pledge allegiance to the nook. people love the nook. but again, it's the scale of an amazon, it's amazing. >> we should point out, shares of ingersoll-rand not up dramatically, up about 1% this morning. the company announcing its intent to split into two. in part perhaps because of activist pressure.

nelson has had a significant stake in that company. but they will split into a residential and commercial business, as well as their environment, or industrial transportation, heating ventilation. so you've got a security company and what we consider to be the core of this, in many ways. significant buyback of shares, and pay dividends. but they're not moving it up, they're paying it in march. >> a new ceo comes in, listed the pelts. why should you buy anything with the pelts involved. this is work for "mad money," after pelts provided it. after. you're up 11%. in other words, you don't know before it. versus the s&p being up 4%. this goes back to 2005. he's been just a terrific guy to invest with, as, by the way, everybody tells me he's a terrific guy. >> he is a nice guy.

his activism, he sort of moved it to the performance side of things, and the operational side. it was started many ways by hines, which was a nasty fight, now he's on the board. he and johnson are buddy buddy. >> johnson told me he felt pelts' idea after initial resistance, that pelts said his ideas were great. >> best buy, one of the big losers this morning. you point out merrill has a note telling a lot of people what they probably already know, financing difficulties. in the meantime, your core business sense has challenges, too. >> i'm not calling this the best jillion buy. this is the biggest loser. >> there's only a couple more weeks where the ceos have to come up with something. there's a 60-day cooling off period. we'll see what we can bring people in terms of his efforts to try to find private equity firms to support a potential bid for the company, one which you

have to imagine, even with a nice premium is coming down, down, down, given the down, down price in the stock itself. it still is, for a declining business, it does bring in free cash flow, that's coming down as well. big question marks. >> price for tvs, costco, offering very, very cheap 70-inchers, as you probably know, having visited costco. maybe you never liked them. >> never. >> they have very good prices for tvs. >> we'll take your word for it, jim. mary thompson is in this morning for bob pisani. >> slight gains in the doubts, 6 pints. s&p and nasdaq under pressure. the drug stocks were a little higher. semis looking fairly strong. traders telling me, the focus for the next couple of weeks is going to be any headlines coming

across for the fiscal cliff. that will drive the markets right now. that is what they're keeping an eye on. the week ahead, we have the fed meeting this week. they'll be watching abercrombie coming out of that. and treasuries up about seven sales in the next two weeks. and so given that a lot of people may have closed their books, they're concerned about what demand might be like for these treasury auctions and how that may not impact not only the bond market, but stock market as well. china, that data was broadly better than expected. that's giving a lift to commodities. we'll get more on that. and the euro banks, too, being hit by news from the italian prime minister's mario monti's resignation. that is causing some concern to the spanish banks as well, where the focus turns once you have the news of monti's resignation. one thing we do want to note, hsbc had its rating cut from

double a minus to double a. abercrombie & fitch, open humor out with a notice saying the retailer looks to the markets over the holidays. s intermec is looking to be up in 2013. jim, back to you. >> let's shift to the bonds and dollars. >> you know, looking at the ten-year, seeing it hovering around 160, is about as shocking as the sun coming up in the morning. but nonetheless, last week on interday trades, looked like we were going to close in the high 150s, which would have taken us back many more months. you can see the closing yield chart, going back all the way to

august 1st. now, look at boon yields. political issues. you can have the best-laid plans by central banks in the end. ballot boxes, politics, it can get messy. think about what's going on here. now, if we look at the boon going back to august 1st, it's a differe bit of a different pattern. it is hovering at the lowest yields. it did close below yields since august. if we switch gears a bit, move a little bit around europe, everybody's talking about monti, dragi, berlusconi, we can clearly see their yields have popped a bit. granted, they have been much higher. everything, of course, is relative. where you start from is more important sometimes than where you were a while ago. and last, but not least, let's hit the foreign exchange side. euro currency down a bit, a lot like the boon it's come back, but it's still in the 129, 130s.

on a pattern formation, many technicians are potentially setting new shorts. jim, back to you. >> rick, thank you. getting out of the longs and shorts, you feel that trade happening right now. let's check out the latest in energies and metals. >> let's start with the metals market. that's where we're seeing significant gains, particularly in copper, after that positive data out of china. industrial production definitely better than expected. if you look at the factory order data, that was the highest output in november we've seen in about eight months' time. copper leading the gap ining th because of the chinese imports of copper. that was significant for that data. we're also looking at the oil import data coming out of china, the third highest on record. supporting oil prices. we're off of the highs for the session of crude oil but still

looking at higher prices for brent and wti contract. but the biggest mover in the energy space today, definitely natural gas. because it's 60-degrees-plus in december today. possibly we'll see an injection to storage even though, yes, it is the month of december. that is the reason why traders are selling that gas right now. back to you. >> all right. thanks very much, sharon epperson. perhaps the largest dollar deal of the day, it is not a merger monday. don't be mistaken, of course. we haven't had many of them. but we have an announcement of a deal, maybe a strong possibility on friday, ilfc, owned by aig, on the block, is going to be sold to the chinese. in a deal in which the unit itself is being valued about $5.28 billion. there you have a look at aig's stock price, which we'll get to in a moment. 81.1% being sold for $4.2

billion. an option to buy another 10% of the company. and finally, but roughly 10% will continue to be held by aig. an investor group, led by the chairman of new china trust that will be doing the buying here. it will require approval to the various regulators, including the review that we referred from a national security point of view from the usa. aig is a favorite, in part because it's very cheap. it trades well below -- but it's also -- they've become kind of a liquidity provider when you have a noneconomic seller which would be the u.s. government. the question is when that all evens out. you'll have proceeds from this not until next year. i think there's going to be another ability to sell more aia, as well, if i'm not mistaken. the aia lockup expires soon. will they then be in a position

to cash the company out entirely. >> sandy hurt that. higher than i would have thought. the government is free to trade. they got 15%. and i think that people who -- my take is, if you want to buy aig, i think that goes up. i would have hoped that the proceeds from the deal you mentioned would be able to take it and chop it up. i'm worried about the sandy. you've got to keep interest in the end. insurance companies, got to keep capital free. >> i wanted to mention, we mentioned this on friday, the chinese have been aggressive, setting records in terms of merger and acquisition volume. we talked about this on friday, take a look across the borders from china, that helps the story. that $15 billion deal did get approved from the canadian government. they do own some assets in the gulf of mexico. although that is not expected to

be problematic at this point. but take a look at what happened in the stocks on friday. that, after we received word there would be a statement from the canadian prime minister. that freaked a lot of risk arms out. did not have a lot of conviction here. thinking, why is it going to come out with a statement if they're approving the deal. you come out and say something if you weren't. but they did come out with a statement and indicated perhaps we won't see any more of these large deals. comp stock is up, as you might expect. >> you heard this deal will be approved. you got it right. >> the consensus is there should not be reasons to stand in the way. but there were a lot of concerns nonetheless. >> the consensus, not making more than 50%. everyone was worried. you were right. >> meantime, i believe we have a full screen of barbra streisand referenced in "time" magazine this week talking to joel stein,

who said, barbra said her body's waking up at 6:25 a.m. she told me the exact same thing as my mom who also has cnbc on all day does, apple, apple. david, she's been a viewer for a very long time. >> very long time. >> i remember from the old "squawk box" days that we would correspond occasionally with barbra. particularly joe. they were in regular contact. in the '90s. she has been an active trader of stocks for a very long time apparently. >> terrific investor. i've known her personally for -- great investor, some of her "mad money," so to speak. she has tremendous real estate holdings. she's been terrific about trying to save money and been a great success. i love her. >> barbra, if you're watching, down 1.4% this morning, apple.

>> knowing her, she's probably short. >> yeah. >> meanwhile, tupperware is getting the seal of approval from investors. the stock near 52-week highs. coming up next, rick goings, we'll hear what he has to say about everything from the consumer to the holiday season and the economy and the fiscal cliff. as we go to break, here's a look at five of the coolest tupperware party themes. the lawn chair party, the tupperritaville party, the bag lady bash. >> tupperrita ville party, that's up your alley. >> and the pms party, as in popcorn, mini tupperware and sodas. >> no walking dead party. >> i'm sure that's somewhere. just for your weekend planning. we'll be right back. [ male announcer ] you are a business pro.

governor of getting it done.

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okay. here we are for the holiday season in full swing. i've known this ceo for a long time. the pulse on the retail consumer worldwide, joining us for the

squawk is rick goings, chairman, ceo of tupperware brands. okay, rick, i'm reading "the new york times" this weekend. perplexed by it. terrible story in britain about australian jockeys -- >> deejays. >> but here we go. in the piece, "new york times," the "daily mirror" published a series of photographs showing that the queen's cereal was brought to the table in tupperware containers. how did you get that account? >> she has good taste. she's a very elegant woman and she likes quality. >> i've got to go to that party. avon falling by the wayside. herbal life, different issues. you offer a product that you could sell in stores, but it's not the way you like to do it. how much more money do you make? you're throwing out a lot of cash. when are you going to give more of that cash to the shareholders? >> we're spending some time right now actually -- and we always like at how are we going to return this money to

shareholders, do we do it with the usual touchbacks. difference. we raised it in the last couple years in a row. so we're, as we talk, we're assessing that situation. >> i like that. i mean, you couldn't be -- that's a great hint. how are you able to manage your sales force, unlike all these other guys do this, so we don't worry about s.e.c., about dumping product, don't worry about the garage filled with tupperware. >> with the companies you mentioned, it's still -- you've got to manage the fundamentals of your business. the power of our business is really the power of women. women entrepreneurs, in both the established markets and emerging markets, we've got almost 3 million of them. if you give them innovative products and a great selling method, they run with it. >> we had a discussion last week, i don't know if this pertains to you or not, nat gas, whether you liquefy it or sell

it, is that a cost input for you guys, the manufacture of the actual product? >> actually, when you operate at near 70% gross margins, i learned this when i was in my old days at avon, we owned tiffany at that time, we learned, my goodness, when raw material prices go up, if you've got a prestige brand, it doesn't matter. you're insulated from it. natural gas prices, or petroleum prices, when they went way up, we saw our stocks soar. we can pass on price increases. >> not many people are aware you have one-third of your business, the container business for other consumer products, like cosmetics. how is that business going? are you seeing any sort of softening in the demands of those packages? just trying to get another sort of read on the consumer. >> actually, we're not making the packaging for cosmetics, we're making it for ourselves. we own six cosmetics companies. the reason we got into the cosmetics business is some of us had some experience in direct selling in cosmetics.

but simply two words, latin america. four out of the top eight markets of the world, when you asked, do i care what i look like, latin america. the market for tupperware products in latin america, $1 billion, $22 billion in cosmetics. >> how are you going up against the competitor? because most people think avon as the vehicle for cosmetics. >> all of our latin american businesses are way up. they're up double digits. we're pleased with what's happening there. >> okay, rick, huge in france. we know french economy not that good. women want to make some money during this period. france is strong for you. >> we've grown, almost doubled the company in the last five years in france. we're the biggest company of our kind in france. we're the largest seller of cookbooks in france. we had some issues the first two

quarters, during the election, as you know, most of the consumers sat on the sidelines. we're starting to see it come back to life again. so we feel very good about france. ditto germany. >> isn't that incredible. >> rick, 52-week high when compared to avon. incredible. thank you so much for joining us. >> good to be here. >> good to see you. >> all right. stay tuned.

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a good lead indicator. >> pwi. >> finally getting recognition. when your grid blows out like in the northeast, you call quaunta. and monster seems to have bottomed here. people were worried about what monster does to your heart. goldman says buy, buy, buy. >> what's on tonight? >> i've got a couple of seattle genetics, companies with break-through products and big announcements. is there anything hotter than brand shale gas, dirty oil, so to speak from canada. he's the best, and they really know about the energy situation in this country. >> every day it's a new headline. >> isn't it incredible? this morning you have a full page ad in "the new york times" showing this -- john leonard's son. wow. i mean, real, real battleground. >> we'll see you tonight.

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the street." our road map for the next hour, mcdonald's beating sales in november. getting a boost from breakfast, especially the cheddar/bacon/onion sandwiches. >> has china reached a bottom. sparking hopes of a recovery, we'll tell you how to play it. >> we'll check the technical levels and see if there's any reason you should get in on apple's stock right now. >> senator bob corker will tell us how he thinks the fiscal cliff agreement can be reached. >> mcdonald's better than expected november sales. the cheddar/bacon/onion

sandwich. rachel joins us in the wake of those numbers. rachel, good morning to you. good to see you again. >> thank you for having me. >> does this mark a turn at least in the u.s.? >> well, we've been talking about the mean re version trade for 2013. i think you should keep in mind that the company does have exceptionally difficult compares coming up in december, and again in the first quarter. given the very warm weather we had last year. it is some positive momentum in the right direction. but it may be premature to call it a complete turn right now. >> yeah. how about the rest of the world, where it appears they are facing maybe stiffer headwinds than stateside? >> well, the great news for them, specifically in china, they actually posted better than expected results. after we saw out of yum, where they posted a negative 4%, i think that will give investors a poost about their trends in that market. >> rachel, what's your take on what contributed or what caused

the turn that we saw in mcdonald's in the month of november? was it the focus on the dollar menu? cheddar/bacon/onion? >> the first thing i would say is keep in mind one month doesn't necessarily make a trend. even excluding the trading day adjustments, they did beat in all regions. they'll highlight the new sandwich, localizing at breakfast in the u.s. the focus on value globally, europe obviously saw as upside as well. i think the key will be what new product offerings they have in 2013 in same day sales, and the stock will have a catch-up trade, or mean re version against its other large cap peers as they inflect positively out of the first quarter. >> the talk is 98. >> i believe that is correct, simon, yes. >> can i ask you more generally where we are in restaurants at the moment. we've had a lot of companies

come out, buffalo wild wings, and people are concerned whether they have business specific problems, or whether there is a slowdown in the consumer in general, particularly in your space, which has speaking about it for two weeks, it's on the front page of the "wall street journal"? >> it's hard to tell whether or not the slowdown that we saw broadly in october and november was because of the election, and then sandy. and now, of course, we're going to have the issues of the fiscal cliff. i would say for something like mcdonald's, though, it does historically trade with a staple and could benefit from consumer tradedown. i would be less concerned about it specifically for that company. but you are right, we do continue to see declining trends in cruise, and las vegas gambling, and other segments we do cover. >> specifically on the restaurants, it was raised by the journal over the weekend, is there a structural change now,

having gone throthe recession about the willingness of people to pay for this sort of luxury? do you think that we've had a substantial change that could last for years? >> i think people have better options. they have anything from the salad bar at whole foods. they can trade up, they can trade down. they have very good options for eating at home. i think the problem is, that the pie isn't growing that much. you have about a half a point of population growth. and you have expansion in all types of food categories. that competes for people's dollars. you're right, people are pretty value sensitive and they're not going to spend any more than they have to on a quality meal. and if they're in a hurry, especially. >> rachael, thank you so much for your time today. >> thank you for having me. >> by the way, as we said, the november sales getting a boost from that cheddar/bacon/onion sandwich. tweet us at squawk street and

tell us what you think is the next innovation. are viewers, they think outside the box. >> no more mcbites, that's already been done. >> in europe, silvio berlusconi may be on his way back to power. monti saying he will resign. berlusconi could run in the earlier than expected elections. carolyn roth is in rome. and she joins us with the details. carolyn, welcome to the program. we've seen today, italian stocks are down, bond yields are blowing out. yet others like jpmorgan saying actually it's not as bad as it looks. what's your view? >> well, that's the tenor from the number of the analysts and economists that we've been speaking to this morning. they say, yes, because we're going to be seeing early elections, too much earlier than planned, we'll see volatility over the next two months. especially as there's a lot of

horse trading campaigning by the different political parties. having said that, though, if you look at the most recent polls, you'll see that the democratic party, which is pro-austerity, pro-europe, actually leads with 16 percentage points. they lead with 16 percentage points over berlusconi's party, simon. so at this point, very, very unlikely that silvio berlusconi, the former prime minister, will make this grand comeback to the political seen. he only has around two months for campaigning left. very likely at this point. but still as you rightly point out, we're seeing a selldown in italian access today. having said that, though, italian bonds are off their three-week lows and we're seeing some limits in terms of the sell-down on the stock market as well. melissa, back over to you. >> thank you very much, carolyn roth in italy. bringing the focus back to the american stock.

how high will this market go in the face of the fiscal cliff. jim is chief investment strategist, good to see you. >> thank you for having me, melissa. >> i know generally you're a buyer of stocks at this point. specifically when it comes to this year end situation that we're in, as we face the fiscal cliff, have you been doing any sort of selling in advance of taxes potentially going higher? >> no. i mean, we don't manage money so much for direct individuals, that can be done from their high net worth group. but i think what we've been doing, if anything, melissa, is taking advantage of volatility. we're not really altering our long-term asset allocation positions, which i think is good, because i think it's going to end and you're going to get back to fundamental drivers for 2013. but on days when there's excitement about a deal being done and the market rises, we may sell some stuff, looking to lighten up, and on days where there's panic we'll go off the

cliff, we'll have a buy list to reallocate assets. that's about all we're doing with the fiscal cliff is taking advantage of the volatility. >> all right. in terms of your buy list, it looks like on your list, industrials, and materials, u.s. financial, let's start with the industrials and materials here. what is the general theme that's driving you to purchase this in the face of what could be a prolonged slowdown if we don't reach an agreement and we're in the so-called no man's land of perg tory for a month or so. >> i think the big driver on that particular play is a reemergence of the emerging world. there's evidence that china and throughout the rest of the world is starting to recover. if that happens, it will restart the entire global manufacturing cycle. the u.s. manufacturing cycle will benefit from that. it's been the missing link in this entire year. the consumer's been good, but the manufacturing sector has been down because the emerging world's been down. if that picks up, i think it restarts it.

and the industrials and materials being the manufacturing part of the s&p 500, i think are going to be a leader next year, as that restarts. >> jim, can i take you back to the fiscal cliff, and the fundamental assumption that this market is making. we've risen on the dow for three consecutive weeks. the fundamental assumption is they will do a deal by year end, and that the markets are not going to fall out of bed. what happens if that assumption is wrong? just talk us through what the initial reaction should be, and at what point do you say, hang on a minute, this is really close to the edge now? >> yeah. i think -- i expect more volatility, if it goes all the way to the 12th hour. and we'll get more nervous, the market will, too. i think we can handle even going over the cliff, because i think there's some that believe that is likely, just on a political posturing. but i think we can't go much beyond mid-january. i think if we do, it will get more detrimental to markets and

confidence. i don't look for that as a very likely outcome, but certainly if it does and you start thinking this could drag on for months, then you're going to have a significant portion of that $600 billion tightening, and that changes the forecast for the year. i think january, mid, but not much beyond that. >> does it become a buying opportunity in essence, or not? >> well, i think that -- i'm with the assumption that they're going to have some agreement. i'm not so worried if it goes to mid-january even. and on that basis, if there's extreme volatility, particularly towards december 31, on the down side, i think it is a buying opportunity. >> all right. jim, we'll leave it there. good to see you as always. jim paulsen at wells. >> will agreeing to higher tax rates help the republicans to get the tax cuts they're looking for. bob corker will join us yet. will we go over the fiscal cliff. >> plus, apple official lofficit

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>> senator bob corker on fox news over the weekend. he joins us this morning on the cnbc newsline to talk about his comments. senator, good to have you. welcome back. >> thank you, sir. >> you sure know how to light up a room. a lot of people talking about what you said over the weekend. are your words being characterized fairly today? >> no, i mean, i thought i did a great job candidly yesterday, and y'all are just showing one little clip. i think all the discussion has been on revenues. the president continues to fight the ball in that area. we're not on the entitlement page. the discussions we've had on our side is to say, look, if the house actually sent over a bill that froze rates at bush rate levels with 98% of the country, all of a sudden everything shifts to entitlements. you still have the debt ceiling out there. and last time we negotiated a debt ceiling, we did a $1 increase for $1 in spending

cuts. hopefully that would be heavily oriented towards entitlements. i still think there's a great chance that something good is going to happen before year end. and i want that to happen. but it does appear to me that what the republicans have as a backstop is holding the rest of the country hostage on taxes, which is not a good place to be. so if you take that off the table, and again, i hope boehner and the president had great meetings yesterday. i hope we solve this. but the leverage it does appear is on his side. and we haven't even begun to talk about entitlements yet. >> yeah. what you're saying makes sense. we've all wondered what it would take to get the conversation to be about entitlements once again. but how do you avoid being referred to as a sellout? how do you avoid the rapid growing sentiment? >> after six years, i'm here to solve problems. and what i worry about,

candidly, is republicans being in a place where they do not hold out for the kind of entitlement reforms we need to have as a country. i already feel that happening. i feel that the debt ceiling being niateaway, us not getting the kinds of entitlement cuts that we need to get, which those are the things that are going to save the country. so let's just say that the house sent over something. by the way, there's a way they can do it and vote for freezing everybody's taxes by sending over a bill that freezes the top 2%, sending over a bill that freezes the 98%, send it over to the senate. you've taken that off the table. the senate obviously is not going to take up the top 2%, but you at least take out of question taxes being raised on the 98%. all of a sudden you're back on entitlements. we still have $1.2 trillion in sequester, which hopefully will stay in place. we will not give that away. then we continue to negotiate on a dollar-for-dollar basis. that way you end up with a $4.5

trillion deal with the proper ratios. maybe the speaker is going to take us to a place that's better than that. i hope so. but it sure seems to me that we're negotiating about something that makes it appear that all we're trying to do is protect the rich. we're not at all focused on entitlement changes, which is the only thing that's going to save our country. >> senator, over the weekend, professor robert frank wrote this was a game of chicken between the two parties. a very uneven game of chicken, with the republicans driving a chevy spark. and the president in the mack truck. what he's essentially saying if we go through the fiscal cliff, to the tax rates reset, he has a better situation to negotiate with you and arguably you may be blamed for driving through that. do you agree the gop may simply have to say yes? >> i do think we are in a very awkward place, as it relates to

taxes on the upper income. i just want to say that, again, boehner offered $800 billion. that's about the amount that taxes on the upper 2% are. so now he's negotiating north of that. i mean, the best place for republicans to be, to me, is to pass the rate increases, be done with it. the number's probably much smaller than it's ultimately going to be negotiated. then we still are focused on the right thing which is entitlement changes. again, i hope the president's going to come to the table, candidly. here we are. every developed country in the world knows this is the greatest threat to our nation. economists on both sides of the aisle know this is the greatest threat in our nation. and hopefully they'll solve this. but right now, there's no question in my mind that the president has the slight upper hand in the negotiations, and my point was, there's a way of changing that leverage very, very quickly by the house sending over a bill that freezes

rates on the 98% of the population that are going to be affected. >> senator, in terms of the top 2%, how much do you see the increase being? how much are we willing to give up in terms of shifting the conversation to entitlements? does it go to 39.6, or 37% solution? >> there's all kinds. i mean, candidly, there are people on the senate democratic side that don't want to see rates increase at 250. they live in new york or new jersey. you might end up with $500,000. you could end up at $1 million. but the point is, as soon as the house was to send something over that dealt with that, you're in a totally different discussion. because then the house has actually dealt with the very wealthy, if you will. they probably can do it in a way that some senate democrats, above 250, would go along with. but even if they did it at 250, what you've done is changed -- you've changed the leverage

dramatically, and all of a sudden we're back to entitlements. again, it's something that has gained a lot of discussion on our side of the aisle. my hope is -- >> senator, when you say it's gained a lot of discussion, because when you describe it the way you are, it makes a lot of sense. changing the negotiations. but how much discussion is there, and how much potential support is starting to move over to your position? >> i think on our side, there is a lot of support for this position. and again, we're not sitting at the table. i know the "wall street journal" had an editorial today, they're my friends, i read them every morning, and if that's the most critical they're ever going to be of me, i'm happy. i read them daily. but i think we are watching the leverage -- look, on january the 3rd, let me just say, the rates go up on jand, how much leverage will republicans have to get it all the way back down,

or is the president then going to be talking about dividends and capital gains and all kinds of other things. since everybody has focused on the rate, and the rate only, we have thought, many of us on our side of the aisle, the best way to get that dealt with is to go ahead and deal with that now. and then let's move immediately to entitlements. by the way, if you did it this week, you still have the rest of this month to have the focus totally on entitlements. hopefully the two leaders will come up with something that breaks. it looks like the leverage is more heavily weighted on the other side. >> well, the president did say last week, senator, that if he got those rates, you could fix the rest of it in about a week. do you believe, before we let you go, is that what's going to happen? >> i actually still think we're going to do something constructive this year. when i say this year, i did talk to numbers of house members yesterday, talking about this very idea. and some of them are talking about doing something january

3rd. and that's fine. i just don't want us to give away the sequester. i don't want us to give away the debt ceiling. unless we've done something extremely substantial on entitlements, which is the only thing that's going to help us get spending in the right order. so anyway, i thank you all for listening. i do think you're playing a piece of the cliff that is probably not the best piece to play. i thank you for playing the one you played right before i came on. thanks a lot. appreciate it. >> we'll see you, senator. >> okay, fine. >> senator of tennessee. by the way, programming note, cnbc will be live all day tomorrow from washington. senator corker will join the squawk at 8:30 a.m. eastern time. >> mixed data out of china this weekend. strategists will tell us why she's bullish on the country for 2013. stay tuned. let's give thanks -

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but this idea isn't fragile. when times get tough, it rallies us as one. every day, more people believe in the american idea and when they do, the dream comes true. we're grateful to be a part of it. asian markets are higher overnight as china showed optimism. industrial production hitting eight-month highs in november. the chief china equity strategist for goldman sachs joins us on the phone from hong

kong. nice to have you back on cnbc. >> good morning. >> let's recap the date a we have. industrial production up over 10%. retail sales up over 14%. electricity production of 7.9%. now, for most people who may not directly invest in china, does this mean that they can buy commodities, material stocks on the basis that china will rally into the end of the year, or does this just take the risk of systemic collapse from china off the table? >> well, i think for sure it does further reduce the risks of hardlining from china. i don't think that's something people have been worried about over the last couple of months. this is probably the third or fourth month of improvement, after we saw gdp bottom in the third quarter. i think people have prices into some extent, so i'm not sure there's a lot of increment

further. i would say probably for the investors, the expectations were lower, but i think with the offshore guys, i think it's more within their expectations. >> stock jen has a note out overnight that draws into stock contrast. the division that you have, the distance between gdp growth and equity performance so far this year. so the top performer is greece, up 24%, and we know how that economy is crashing. the bottom performer, or one of them is china. which even today is down 5% year-to-date, even though it is growing at the rate that it is. what does that mean for 2013? do you get a snapback, or are the central banks driven a big wedge between reality and stock market performance? >> i think that's a great question. you know, i think over the past few years, indeed, china's equities have been pretty week, especially in the asia market as you mentioned. i don't think that's necessarily because of a lot of cyclical

disappointment. certainly that hasn't helped. but in reality, i think the earnings have not been so bad until this year, it was actually the valuation that kept seeing further and further compression. i think that's coming from people's concerns about the structural problems in china getting bigger. therefore, whatever level gdp growth was seeing today, or earnings growth, people think it's not sustainable going into the future. in 2013, we don't have any assurances that this is definitely going to change. but what we do know is that people are now, for the first time in quite a while, contemplating maybe there could be a turning point with a new leadership, assuming their positions in march of next year. and some of the new years coming up and maging more reformist comments recently. >> let me ask you, finally, about that new leadership and the new premier. riding around over the weekend he's a man of the people, in a mini bus that's not blacked out for once. is there a risk for america here over the fiscal cliff? last time when we had the debt

ceiling discussion, in the wake of that, there were some very strong comments out from senior chinese officials, that china should think twice about buying american treasuries. do you think that is a response that could be similar, although it be only verbal, if we go over the fiscal cliff? >> well, i think certainly the senior chinese leadership has been watching the external demand picture very, very closely. i think they're looking for all sorts of potential risks as well, potential opportunities to pick up assets on the cheap. i think in terms of china's own policy itself, the most obvious thing is if indeed it falls off the fiscal cliff, or things in europe, et cetera, we think they're likely to further loosen. however, if that doesn't happen, we think that the stage of loosening is more or less done for now. if there is further loosening policy, we think fiscal policies are likely to be the first line of defense before they resort to property policy adjustments. >> helen, have a nice evening.

hell i zhu for goldman sachs. apple shares falling further into bear territory. what should you make of the debt cross. we'll tell you. stay tuned. americans are always ready to work hard for a better future. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪ [ sniffs ] i took dayquil but my nose is still runny. [ male announcer ] truth is, dayquil doesn't treat that.

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we're about an hour into trading here on monday. 7:34 on the west coast. 10:34 on the east coast.

priceline one of the biggest losers after hit with a downgrade from hold to buy. barnes & noble cutting the price of its nook. from $79 to $99. holiday shopping competition intensifies. a price target from jeffries this morning continue to drag shares of apple lower, after that stock hit the critical debt cross on friday. the last time was in december of 2008. brian marshall, and mark newton. guys, good to see you. mark, i'll start off with you. we were discussing before the death cross and maybe lack of importance with the death cross. walk us through why you think it may be too much hype? >> it's been inconclusive over the years. this has happened five times

with apple since 2001. the last time in 2008 was occurring at the lows of the stock. in 2008, a lot of stocks made death crosses in the fall of that year. so it's important to utilize a lot of other indicators besides just looking at the 50 and 200 moving day average. i think the stock is getting down to levels that are important. >> to be clear, though, september 2008 was one of those instances of the death cross. >> yes. >> but one month afterwards the stock was down 27%. even though the second death cross was a predictor of a market turn, you got your face ripped off in the stock in the meantime. >> stocks actually go down about a week after the death cross happens, and a month after the tune of about 2% on a one week basis and almost 3.5%. if you look at the three months following that, it's actually much higher. to the tune of almost 12%, historically. it's important to use other indicators to see what things

line up in that regard. >> brian, i want to come out to you. your cohort over at jeffries cutting the price target this morning. specifically citing decelerating growth in fiscal 2014. saying that it could see that year negative margin leverage in a multiple compression. how concerned are you about 2014? what is beyond the holiday season? >> well, i don't think deceleration of numbers is anything new, melissa. if you look at it, that's been the case every year for the last couple years, basically having the growth rate from the prior year. 70% year-over-year growth, 15% year-over-year growth. since late december, the stock is down 25%. obviously that's left an indelible mark on the investment psyche. we think things are pretty solid. we think december quarter is going to be good. i think stock's worth $710. >> it seems like a lot of bearish notes.

look at fundamentals, even those like today out of jeffries, all the really bullish notes are pinned to some sort of amorphous hope about television, or some product that hasn't been launched yet. is your model in fact entering some revolutionary new product? >> no, carl, it's ot. apple has typically been introducing revolutionary products every three years. 2004, the ipod. 2007, the iphone. 2010, the ipad. 2013, people are putting their hopes on the tv. but even if it comes out, we don't think it's really going to move the needle for apple. which is going to be close to $200 billion in sales next year. we think it's all about the iphone market as well as the ipad market. we think the biggest driver of the numbers year is the penetration of the international post-paid subbase of characters. we think they still have a great opportunity going forward. >> a stock as liquid as this, as

heavy invested as this, do you think it's an hour 34%, 35% off your price target? isn't something happening in the market that would unnerve you in setting that? don't you say, maybe i need to rethink or rerate this? >> well, you know, we've been in the low 700s, which is probably on the low side if you look at it for quite some time. i think there is an opportunity to get there, you know, simon, if you think about it, this is trading at below market multiple. we think there's upside to the $50 for earnings calendar '13. if that happens with roughly $130 of net cash per share, we think it can justify a stock in the low 700s. it wasn't that long ago we were actually there. 60, 70 days ago. we think there's a potential for this to get back. but clearly, it's obviously taking it on the chin recently. >> mark, last question to you. if not the death cross, then what else are you looking at in the charts?

is it actually -- it seems like we're continuously bouncing off of those main lows at least. >> right. a couple of things are important. when you look back at when the stock peaked, there were a couple of signs that were important. volume started to dry up, and volume picked up on the down side. even though the momentum has turned negative, you look at daily, weekly and monthly bases, longer term uptrends since 2009 are still very much in place. that's really what i'm looking at. the area right near november lows, between 495 and 505, should be an excellent area to take a look at buying the stock. >>er 30 bucks lower or so? >> correct. that's right. i give it about a 7% maximum down side in the next five to seven days. as you get near the november lows, it should be a very good risk reward. i'm looking at really the highs from november, which are right near 600, and above that 635, which is what a lot of people have mentioned already. but bottom line is, momentum is

negative. the longer term trends don't suggest selling apple here. >> we'll leave it there. brian marshall, mark newton, thanks so much. if you're looking to get into a luxury car, now might be the time to do it. mercedes-benz, rolling out cars few in the industry have ever seen. phil lebeau is in chicago. i guess essentially, phil, the europeans are taking a leap out of the americans' book. they used to scoff that the american automakers would offer. now it's par for the course. >> especially in december. it used to be lexus, but mercedes-benz was looking for offers in november. this is an increase compared to october, up 42% for bmw, 26% for mercedes, lexus up 3%. what's going on here? let's start with bmw.

their holiday deals now include up to five months of no payments. that's the kind of stuff you used to hear from chevy or from ford. by the way, bmw sales surged 45% last month. mercedes leads bmw year-to-date by just under 1,900 vehicles. it last led the u.s. luxury sales in '99. it really wants the title again. at the core of what's happening between these two german automakers, they need strong sufficient sales to offset the weakness they're seeing in europe. that's why their production has been ramped up here at their facilities in the u.s. bmw announced it's on pace to set global sales of more than 1.7 million. that would be a new one-year record. and these guys pretty much have traded in tandem, simon, with the exception of the last three months, bmw up 28% in the last year. mercedes up 18%. all of them said the same thing,

play these guys off of each other if you're in the market for a luxury car. they'll make a deal. you'll be surprised what they'll do. they'll sit there and say, we'll not go $3,400 off, they will go above that. >> phil lebeau talking cars today. what would happen to the mortgage interest deduction in your state if in fact we go over the fiscal cliff? the exclusive numbers on that after the break. [ male announcer ] it's that time of year again.

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i wanted to update our viewers on shares of hewlett-packard. you may have noticed one point eclipsing up 4.5% today. now taking off some of those gains, but still up almost 3%. a lot of chatter continues to be centered on the idea of potentially breaking the company up. some people would say you certainly do get a fairly big number. let's not forget it's not the hp of packard and hewlett.

this argument continues to be out there. and then you'll start to hear rumors about a potential activist. let's not forget they already have an activist on the board of directors, ralph whitworth, owns a stake in the company and a director at this point. while we'll probably continue to hear this, i can tell you at this point that though it will again be discussed, bill george, remember a couple of weeks ago, having written a column to the effect that hp would be better off being split up. nothing indicates to me, at least, that the board, and management are anywhere near deciding to go down that road. many times when meg whitman has been with us, she indicated this is an important year, 2013, for hewlett-packard. and perhaps if it doesn't work, in terms of the vat strategy, t don't start to get traction, you may see a change if something breaks. but not at least at this point. we've heard carl icon's name pop up in the chatter. hp has had no conversations at this point in any way with mr.

icon or aware he owns any single share of the company stock. that does not mean it's not a possibility. we haven't spoken to mr. icahn this morning. all could a lessing around this idea could go down this break-up line. >> it sets up -- i don't know if there's a win-win situation here, but maybe they're thinking 201 is going to be an important year for hewlett-packard. you've got whitworth on the board already, so off of the lows from the autonomy alleged bottom, it's not a bad risk/reward there. >> there may not be value to unlock in the business. >> that's true. >> a lot of people feel they have different fault lines, and sort of it's a con glom ratiglof things that could help. >> hp's number eight out of 500 on the s&p. somebody's paying attention. >> it has significance bounce

off that low. that we saw not long ago. >> thanks, steven. meantime, how does your state's mortgage interest deduction compare with the rest of the country? lending tree's numbers for cnbc is breaking down at hq. >> carl, the mortgage interest deduction has always been the sacred cow politically untouchable, because it's so popular and designed as a housing stimulus. now, though, it is on the fiscal cliff table. realtors and builders alike say it will have huge con quenss for home sales and prices. but will it? we'll take a look at the who, where, and how much. as we said, we have exclusive numbers from lending tree going state to state. when you take into account the home value and mortgage size and income, borrowers in nebraska and arkansas saved on at least $2,000 with this deduction. on the flip side, borrowers in washington, d.c., hawaii and california, they're getting the biggest tax benefit in the $3,000 to $4,000 range.

new york and new jersey are also way up there, thanks to high home values and income. and i'm noting them because these two states need home buyers, desperately. they have some of the biggest backlogs of distressed properties and need buyers in there absorbing that distress. taking away the deduction takes away one more reason to buy. $2,000 to $5,000 a year is a big savings. but we have to keep this in perspective. you only get the deduction if you itemize an only about one-third of americans do itemize. just 27% taking the deduction. and i want to note one other thing, older americans, 54% of families ages 55 to 64 are carrying mortgage debt. that's way up from 37% in 1989, because during the housing crash they were unable to move. so that's going to hit them hard as well. especially for the next several years. melissa? >> some very interesting figures. diana, thanks for that report. back at headquarters a quick

market flash. >> good morning. take a look at marathon petroleum trading at all-time high levels, the spinoff from marathon oil in june of 2011. mpc is one of the companies of favorite stocks for 2013. barron's highlighting the independent oil refiners are one of the strongest industry groups this past year. the stock up 2.2% at 62.01. back to you. >> thank you very much. coming up we'll talk about the latest developments for the fiscal cliff negotiations with a former senate banking committee economist and the former chairman of the white house council of economic advisers. perhaps even more importantly rick santelli will be live from chicago. >> hello, simon. i'll tell you what, make sure you come back in about five minutes. [ male announcer ] this is amy. amy likes to invest in the market. she also likes to ride her bike.

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let's get to the group this monday morning, check in with rick santelli and get the santelli exchange. >> good morning, carl. to me, if you're trying to work with individuals to solve the problem, trust and honesty are very big components of that relationship working. and i'll tell you what, my theme of late has been that there's a lot of fibbing going on with statistics. but to the point where we take

so many things for granted, we miss so many nontruths. and i'll give you a nontruth. we always talk about the 1993 income tax of president clinton, and the top tax rate was 39.6%. threshold, $250 thud. so flash forward from 1993 to present, okay. well let me tell you something, there is this little thing called inflation. i know this might be nitpicking. but $250,000 today well, started out if you want to be apples to apples would be about $165,000 then. in other words, we are not adjusting even for inflation. so, if we're talking about $250,000 today being the same as then, we're wrong. it would be $165,000. so the point is, is that the difference between these two is

$85,000. okay? is a 35% miss when it comes to being honest about it. oh, even worse let's take this. how many times, of course you've heard a million times, taxes on million favors and billionaires, even though, and i know this is adjusted, okay, but let's just keep it $250,000. well, 250 grand isn't a million. so it's off by 750-k over 1 million. okay? so, in essence, what we're doing is we're off on this one by 75%. we're off by 35% and 75%. so why am i doing this? because i'll tell you what, middle-class america, pay attention. because if the misses on income tax are this large when they're talking to you over simple numbers, how long, exactly, do you think it's going to be before they get in your pocket? people making $50,000 to $100,000. if we really want to come up

with honesty in negotiating, first of all, if you're going to tax millionaires and and billionaires on it the 250 grand threshold, okay, fine. but make sure their net wealth really is a million or higher. and any tax increases should go direct to deficit reduction. take away the hey, everything goes into the general fund because it certainly seems like when you're fibbing about 35% and 75% truths that really all they're after isn't fixing the economy, it's your bucks. back to you. >> all right. rick, breaking it down like no one else can. rick santelli with the santelli exchange. tweet time now. mcdone old's november sales getting a cheddar bacon boost. sales figures in the u.s. rising 2.5% as customers chomped down on the limited time cheddar bacon onion sandwiches. so what is the next menu innovation that could propel mcd? tweet us @squawk street. we've got some of your answers right after this. can i help you?

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♪ [ male announcer ] 'tis the season to discover the kid in all of us. enjoy free shipping and great values on your holiday shopping from l.l. bean. squawk on the tweet today. mcdonald's same-store sales got a cheddar bacon boost. what's the next menu innovation that could propel mcd? >> fries cooked with the ketchup

on the inside. the mcair burger that should provide adequate propulsion, hash tag junk food gives you wind. i don't think we had to read that. the mccliff burger, it will have half the beef and cost the average american twice as much. what's coming up today? >> retail check on shares talking about the two big sales to kick off beginning of december. and also we're looking into the appliance cycle. appliance update cycle is on its way so we're going to see how much of that can actually help the u.s. economy. >> we're the best. way to go, us. >> yes, yes. >> we'll see you tonight. see you guys in a little while. thank you, if you're just tuning in this morning here's what you missed earlier today. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> there's a horrible 35% chance that we'll still go over the

cliff and have pure chaos. but i think the chances of getting it done now are better, and i think that's what's key. >> we'd like to see a deal right now that includes restructuring of entitlement programs. that's what drives federal spending. we can't solve this on the revenue side. >> can we go to mcdonald's and make a statement to your cardiology which is basically, you don't matter. it's a statement to your cardiologist! what is your plan? no one is speaking the specifics because it's third rail. it's just plain third rail. i haven't heard a thing about what they're going to do with medicare. the power of our business is really the power of women. women entrepreneurs, in both the established markets, and the emerging markets. we've got almost 3 million of them, and if you give them innovative products, and a great selling method, they run with it. >> i just don't want us to give away the sequester. i don't want us to give away the

debt ceiling. unless we've done something extremely substantial on entitlements. >>re c our list as the "squawk on the street" countdown to christmas continues. ho, ho, ho. >> good monday morning. we are live here at post nine of the new york stock exchange. let's get a check on the markets today. dow's up about 35, 36, moderate green arrows today. s&p up to 1421. that's above that magic wind of summer watching of 1419. and the nasdaq up about 18, as well. priceline down sharply today after a downgrade to hold from buy over at deutsche. challenging environment for priceline even though it says the shares are still attractively values. road map is going to go like this. fiscal cliff face-off coming to an end. the president and the speaker holding a meeting at the white house this weekend. we are live in washington with the latest. what it all could mean for the che. whether or not we go over the

cliff could have a major impact on the markets in 2013. barclays coming out with its outlook. we'll talk to their first strategist. weeks away from christmas but today is the busiest day actually i think in corporate history for fedex. millions of deliveries being processed. we'll take you live to a fedex center as millions of dollars, nothing to laugh about. we'll introduce you to the entrepreneur who has managed to make big money making people laugh with his company cheeseburger. that's coming up later this hour. we'll start in washington. president obama, speaker boehner met face-to-face over the weekend to talk some fiscal cliff. our john harwood is live at the white house with more on that. john, good morning. >> good morning, carl. you know the president's been very clear since the election that republicans need to give on taxes for people at the top and not just on revenues, but also on tax rates because he says the math can't work otherwise. we've seen some signs of cracking in the republican unity. that suggests we may be getting to the next phase of negotiations. the latest sign was possible

corker, the senator from tennessee, who was on our air just a few minutes ago, as you know, saying republicans should concede ground on top tax rates and then get on to other issues. >> the best place for republicans to be, to me, is to pass the rate of rate increases, be done with it, the numbers aprobably much smaller than is going to ultimately be negotiated, and then we still are focused on the right thing, which is entitlement changes. >> and that may be what john boehner and president obama are discussing yesterday, and in the days to come. because, speaker boehner needs some concessions from the president on entitlement reform in order to bring his troops along on a tax increase. we will do that, but he's got to get something, two potential areas of compromise are the ones that they agreed on tentively in the summer 2011 grand bargain talks which is raising the medicare eligibility age, and also reducing the inflation adjustments for social security

and other government programs. but that might not be enough, carl. we might have to see some other changes to medicare before this deal gets done. >> all right, john, i know you'll keep us apprised as to who's going into what room, because that's what it's come down to. john harwood in washington. be sure to tune in tomorrow for c innocence's special fiscal cliff coverage, live from washington. mission critical, rise above d.c., all day long, of course, becky, jim cramer, brian sullivan, maria will be holding lawmakers' feet to the fire in direct interviews about where they stand on the fiscal cliff and how they'll do their part to rise above partisan politics and reach a deal. earlier on "squawk box," erskine bowles, the co-founder of the fix the debt campaign, co-chair of fiscal responsibility and reform was asked about the progress he thinks both sides were making. >> i think the atmospherics are getting so much better. we've kind of gotten out of the ka kooky theater and gone to dancing the tango with those two guys. any time you start to tango you

got a chance. >> joining us this morning from newton, mass, greg manke, economic adviser to the romney campaign, former chair of economic advisers under george w. bush now an economics prof s professor at harvard and ron johnson, director at the institute for new economic thinking and a senior fellow at the roosevelt institute. skwre, good to have you both here. good morning. greg, let me just get you to bounce off of what corker said today. we've had a few senators here and there appear to give on taxes but corker laid it out pretty nicely, if you want to have a discussion about entitlements why wouldn't you get rates out of the way. does that mark a new chapter in these talks? >> it might well. and the whole issue, this whole package is going to look like, republicans have already conceded to some degree on revenue. they'll probably concede a little bit more. the question is what is the president willing to concede on the spending side? the liberal part of the democratic part of the party

doesn't want to concede anything on entitlements. that's where the real problem is. the growth of entitlements is going to put us into bankruptcy unless we do something about it. >> do you believe giving him what he wants on rates forces his hand to impress us with what he's willing to do on entitlements? >> well, it changes the conversation. if the republicans say we're willing to give on rates, we don't know how much by the way, whether it's 39.6 or 37 or something, as long as we get something on the spending side the national conversation can change. stop talking about the rich. and talk about what the real issue is, the middle class. middle-class benefits, entitlements, we don't have the taxes to pay for it. it also tells the middle class, either you've got to pay more taxes to pay for these benefits or take less benefits to live within our budget. >> you don't have a lot of faith that we're going to avoid the cliff at all? >> i don't. what we're going to do is either walk -- i wouldn't even call it a beach, we're going to walk and

get our feet wet. >> even how cold the water is. >> there's no cliff we're going to drop off of. >> why is it not going to feel as sudden as some think? is it because treasury can withhold rates for awhile? is it because congress would, after the new year, quick accelerate discussions? why less painful than some think? >> first of all the sequestration and the other tax hikes are already anticipated. so they're affecting behavior now. we start easing down the beach. when we cross the threshold negotiations will continue and people will hold out the prospect that they still may get the deal, so you won't get a discontinued all-out despair. people are already quite cynical and disappointed about washington. >> you know allen blinder had an op-ed in the "journal" last week. he went back and pointed to march of 1980, back to carter days, where you had a shift in policy, it might not have been dramatic, but the psychological impact on consumers and their

wallets certainly was. and that created real problems. do you agree? >> yes, i do. i think rob's right. if we go past january 1, that's not a problem necessarily, people think this will be resolved by january 15th. but if we go past january 1 and we don't see any resolution in sight, people are thinking it might be months before we resolve a possibility. the psychological impact would be quite large. >> are you a fan, rob, of say we get some sort of framework that does, i mean for a long time, we keep kicking the can, keep kicking the can, a lot of people would settle for some can kicking now, even if it pushed the harder conversation into the summertime. is that what's going to happen? would that be okay? >> i suspect it will. i'm quite, i would say pessimistic about getting at the real issue. the real issue, as greg alluded to, is medical costs in entitlements in the medium term. insurance rates, pharmaceutical monopolies, hospitalization monopolies, are the essence of the problem. all you have to do is look at

every other industrial country. we pay almost double for care that's ranked 37th in the world by the world health organization. getting at that nut is almost sufficient to handle our long-term stability. and i'm not confident we can get there. >> it certainly is, i mean having that discussion with the broad populous of this country is tougher than telling them you're going to raise taxes on the rich. >> oh, absolutely. i mean, unfortunately there's no easy solution to this, the health care problem. i think trying to squeeze providers can only go so far. ultimately it's going to be patients who are going to bear the brunt of that. i don't think we have any easy answers to the rising health care costs. >> we certainly have painted ourselves into a corner. rob, greg, thank you for your time. good to talk to both of you. retailer gap having its update of the day. jackie deangelis back at hq with the flashback. >> gap stocks down more than 4% today and more than 11% over the

last week. this is after concerns about potential future discounting possibilities. now harrah's investment bank saying not so fast, that chatter is premature. while there's no crystal ball for the holidays, they have very well controlled inventory and marketing. right now the stock is at 30.37. carl? >> thank you very much, jackie deangelis. stacks on the rise over the last month. gary is going to tell us why stocks are set to go higher from here. first rick santelli, you're working on something for a little bit later on in the hour? >> got to feel like hand signaling. i used to do that for a living before trading. before cnbc. but one thing i can tell you, throughout all those years there's very few contests that the state of illinois wins. well i guess they win in terms of underfunded liabilities, crummy credit ratings, negotiations with unions always seem to go a certain way. but there is something our next

guest from chicago magazine found that chicago won hands down, and when you come back in about five to ten minutes i'll tell you what it is. this accidet with my state farm pocket agent app. you can also get a quote and pay your premium with this thing. i thought state farm didn't have all those apps? where did you hear that? the internet. and you believed it? yeah. they can't put anything on the internet that isn't true. where did you hear that? [ both ] the internet. oh look. here comes my date. i met him on the internet. he's a french model. uh, bonjour. [ male announcer ] state farm. more mobile than ever. get to a better state. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one.

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gary is back, and man are you -- you look rested, man. you look so rested and tan, and what are you going to tell us? >> you know, here -- i can't

tell i lie, i was on the beach. i intended to come back here today and talk about all the negativity i heard from people in real businesses. that actually manufacture products, actually sell product. there's two different words out there. there's the real economy world, people that actually are in business. and then there's the wall street economy. and i must tell you that i had this whole big plan out to give evidence and actually walk you through why i was convinced after last week that this recession call, no matter what happens with the fiscal cliff, is going to happen to 2013. but then i spoke with my greatest source in terms of the overall markets. this is the guy who gave u.s. the heads-up in terms of what's happening with apple when he follows the mutual fund holdings and that turned out to be the absolute best indicator on the top and when it became oversold. so this is what rich said to me, forget about what people are telling you in the real economy. when you manage money it's about what the stock market is thinking. these are the pivotal five reasons why the stock market will go higher into the end of the year and early next year. it's very simple.

contra investment sentiment. you can't find anyone bullish on the stock market other than a handful of strategists. bond fund inflows. if we were anywhere near our top of the stock market you would start to see the massive outflows out of the bond funds. we're not seeing it. lackluster ipo market. there is a great telltale. we're seeing very few deals come to market, no hyped up deals, no coattails for the stock market on the ohio market. this is a great one. lack of story stocks. those who have been around, remember whether it's ten years ago, 10, 15 years ago, there was nobody talking about any stocks. any name. any stories, any kind of things that are getting hyped up. here's the last one, there is no retail marking debit balances out there. so how can stocks not go higher if you're a contrarian when you look at those five facts? despite what may or may not happen in the economy. i intended to come back here and tell you continued to believe things are very negative in the

real world. but remember the real world and the stock market world are not the same thing. >> there's examples 6 that all around the world. talk to you in a bit. today's the bus crest day of the season -- fedex to make 19 million deliveries today, thanks to a boom in online shopping. our cordny reagan is live at a fedex center in the bronx. >> i know it's early in the morning relatively. but we're only five hours in to a record day at fedex. we're going to see trucks begin to return to locations like this one after making those early morning deliveries. fedex ceo fred smith expects his 300,000 plus employees to help move 19 million packages through the kneltwork today. that is a record. and it's autopsy 11% over last year and it is, again, online shopping. the more customers click the more they get shipped. fedex counts today as its busiest day because of the record number of orders in the

system at any given date. that means all of those gifts that were ordered on cyber monday that get delivered today are counted. as well as the purchases that are bought today, on green monday. those also get counted. green monday has become a very important day for retailers, as well. walmart, for one, says that it was its highest traffic day on its website last december. they're offering deals and promotions again. hopes it gives consumers another reason to spend. macy's green monday, the third biggest online spending day of the season, and probably the year, when all is said and done. so, fedex is going to have even more shipments to make sure they get to those door steps in time for christmas. carl? >> courtney just stay out of their way. be careful. take care of yourself. courtney reagan at the fedex facility in the bronx. so-called big government may not be the problem. find out why little government could be causing more than a

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>> >> let's get to rick santelli in chicago talking not big government, rick, but little government, right? >> well, i guess we're talking a little bit of both. because illinois makes everybody's government look little or small by comparison. you know, on my license plate it says illinois, land of lincoln. but my guest, wes mosser, wes, what a great first name. i feel like that should be a character in a clint eastwood movie. what did you call illinois? >> land of 10,000 governments. >> is that the most in the

entire country? >> most in the country. >> i want you to tell me first of all how you know this? >> well, every ten years the census bureau does a survey of local governments and they count up all the local governments for every state in the whole country, school districts to basic districts, anything with taxes authority -- >> let me start you right there. anything with taxing authority. so, there is a reason for the proliferation of illinois fifedom and that is to get inside people's wallets. so you're talking about raising money. whether it's through municipal bonds like board of education, or some of these mosquito abatement, so it's in essence to get that money? >> yes, it's overlapping local government districts that, yeah, pay for all sorts of things. >> okay. now before this involvement, what was the limitation of restriction in getting that money that caused this to develop? >> oh, this was in the 1800s, and the state limited the amount

of debt that municipalities could carry. so, to get around that debt limit they created, you know, all sorts of different taxing districts that overlap. >> now what's the second largest in terms of fifedoms? >> pennsylvania. which has a similar township system. a lot of very, very tiny governments. >> another state that is far from economic engine, locomotive with a lot of horsepower. and then beyond those two, beyond illinois and pennsylvania, what happens there, whet? >> then it starts to correlate a lot more with the size of the state. illinois and pennsylvania are really outliers in terms of the number of governments compared to the number of people we have. >> i find this really fascinating at this point in history, where we're all discussing fiscal cliff, and what you're describing is a situation where the state of illinois allowed go-arounds basically to create more debt. it sounds to me like in this instance, illinois is a model for the over trillion dollar debts we've had for several

years in this country. now, we're dealing with reform issues right now. illinois has a boatload of reform it needs to do. doesn't this fifedom proliferation make reform really difficult? >> it does. and people have tried to reduce the number of governments. kurt dillard who ran against pat brady for the gop spot in the governorship in 2010, he ran on that platform. didn't quite happen. but it is an idea that continues to flow forward for a couple decades now. >> and right now we're looking at our governor quinn is in a battle with unions and one of the judges weighed in saying that if you can't afford to pay people you promised raises to, you're going to have to accrue a 7% interest charge. boy that's going to go a long way. just think about it. illinois taxpayers, over the years, some of your checks have been a little late. i don't think you got an extra 7% for your time. whet, thank you for being our

guest today. >> thanks very much. >> all right, thanks so much, rick santelli. bells are about to close across europe. we'll bring you the close and some of the details on the impacts here in just about 3 1/2 minutes. plus the head of u.s. equity portfolio strategy at barclays barry knapp will give us his ouk fo2013. [ male announcer ] where do you turn for legal matters?

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about 40 seconds until europe closes here. a lot to watch over there. simon hobbs, whether it's the data or just the sheer political

drama that is italy today. >> absolutely. let's mens the data. let's mention germany. germany's going to contract in the fourth quarter. the trade data was weak. the bund bank lowered its forecast. we're also watching the greek bond buyback. they've extended the deadline to 5:00 a.m. new york time tomorrow, because they didn't get enough people offering to sell their bonds at that deep discount. those two stories, those two stories in the background. let's check the close. >> the european markets are closing now. >> well, you don't have to be einstein to work out there's a problem with italy that has moved on to spain. look at the lock on the italian market there. spain down also. mario monti announcing he will resign as prime minister having lost the support of silvio berlusconi's majority in parliament. so how bad is the political crisis? well, the sort of analysis we're getting out at the moment, certainly from jpmorgan, saying concerns may be overdone at this

stage. you know, mario manatee may declare himself as a candidate for that earlier election. he could align himself with a later party and he could come back in some form of coalition. if not, people are saying look, the leader is also pro-austerity. silvio berlusconi is not going to end up running italy. i think perhaps a bigger issue at this stage, and this is from deutsche bank whether the virtual intervention we've had, the ecb saying we will intervene if we have to, may now be wearing a little bit thin. there is a knee-jerk reaction. the italian banks, they're all down. they're clogging up the bottom of the stock 600 in europe. so the banks have fallen. some of the industrials have also been marked lower in italy. today for example you could see with alitalia, and telecom italia is also lower.

you see a spike higher in italian yield. you'll see the headlines, and they'll be raging about it. bear in mind where we actually are on this quite high yield relative to where we've been. let's get some perspective on what has happened. what i think is more interesting is the fact that it's moved over to spain. do you remember when we had that bad auction. the spanish didn't get as much debt away last tuesday and that really spooked the markets, potentially we're reaching a point at which the ecb saying that it will act further down the line may not be enough to get this huge amount of paper that comes particularly from the spanish through the markets next year. that is probably a discussion for 2013. the main point here is, how do you topped out now on peripheral debt in europe? and that really is a major question. eurozone banks, those that are connected to contagion for once, are moving in the wrong direction, though it's not a huge move overall, carl. obviously we'll watch italy, and if it becomes a more bearish

situation, we'll let everybody know about it. >> yes. getting used to waking you up in the morning and reading italian headlines. mary thompson, a look at who's moving on the big board. good morning to you. >> not a lot moving, carl. fairly quiet session. given the lack of data today, economic data here in the u.s., and a numb bev of big deals, of course, investors continue to focus on any headlines that will come out of washington. so far it's been quiet and so has activity in the market with dow held at just about a 56-point range today. what are investors focusing on? well, in the absence of any headlines, of course, they're awaiting tomorrow's two-day meeting from the federal reserve. and also a lot of bond auctions here in the u.s. heavy supply over the next eight days. also bond auctions in italy and spain to see how they are received. take a look at some of the sectors leading the markets higher. technology, health care and industrials moving to the upside. we are seeing weakness, so in financials as well as telecoms today. i also want to point out the outperformance we're seeing in

hardware stocks. all of this despite the weakness we have seen in apple recently. the new york, nyse computer hardware index outperforming since the beginning of december, having its strongest five-day run in four months, and since the beginning of the month, it is up just about 5.8%. who are the leaders in this group? take a look. we're seeing strength in seagate and hewlett-packard up today, of course, because there's been some chatter about a possible breakup. but these are the stocks moving higher. again, as i point out, despite some of the weakness we have seen in apple, this is a group that has been performing very well. retailers mixed to slightly weaker, of course in the wake of the same-store sales numbers that were disappointing. ahead of thursday, retail sales numbers for the month of november, take a look at some of the retailers. jcpenney is moving higher. abercrombie & fitch, comments coming out from oppenheimer. weakness in gap, kohl's and target today. dow holding onto a 30 point gain. >> we've not had four straight days up since the middle of

october, mary. we'll see how we do this afternoon. mary thompson on the floor. upgrade moving one drug company. jackie deangelis has a market flash. >> j&j is up 0.3%. this is not an upgrade to buy from neutral at davenport. tries target, $80 a share added to analyst action list. after j&j reported last quarter davenport analyst remained neutral pending some further improvement in operations. but he's saying that latest talks with management suggest that, in fact, he's seeing that. that the new product pipeline is delivering pharmaceutical and medical advances. he sees some light at the end of the tunnel. so a little bit of a boost for the stock trading above $70. >> thank you very much. another capital markets op-ed. you were gone all last week so we couldn't talk dividends. they were coming like rain water. >> i really missed hobbs last week. i was doing the iminternation, who does it sound like? the feds will be aging. the way he delivers that bad

case for italy. the bears will be raging. in between tequila shots and dancing on tables i did pay attention to the advanced dividends and dividend increases last week. you're going to see that continue for the next few weeks. it will say this, it is important to remember the capital allocation pyramid. i don't know if we have it. but i will remind people, dive dinds are great. 50% of return in stocks over the long term is dividends and distributions reinvested. if you remember that pyramid here, do we not think cash, m&a, buybacks are good but typically the multiples come down. dividends, great way to use your cash. 50% of the return long-term. but remember, remember, and before the dividends, if you want a contrary opinion, if you want it, i recommend this f.t. article that came out today, u.s. companies, mixed blessings. it's a great piece to read in the f.t. if you want to know about how a lot of these companies are borrowing money and making a big bet by borrowing money to pay these

dividends. remember this, organic growth, always the best way over any long-term period. so yes, the dividends are great. yes it has to do with what's happening in d.c. for the most part. but remember, organic growth, multiple expansion the best way to make money in stocks long-term. don't let that be forgotten in the differ dends euphoria. >> yes, well said. there's been a lot of that, gary. >> you got it. >> barclays releasing its outlook for 2013. barry knapp is the head of u.s. equity portfolio strategy with barcla barclays. >> good morning, carl. >> 1525 doesn't sound so bad. largely on the back of cap-ex coming back next year. walk us through it. >> sure. yeah, that's, we think that's a relatively optimistic forecast at 10% total return. we do think that the market will struggle at the first part of the year. we need to work through all this public policy uncertainty. to focus on the timing of the deal, we think misses a larger

point as to whether we actually get a good deal or not. our definition of a good deal is one that isn't too reliant on tax revenues, and actually does start down the process of getting our mandatory spending under control so we don't siphon off all our savings over the long run away from cap-ex towards funding the public sector. but what we think is going to happen, earnings growth decelerated massively from 2012 from 15% a year ago to slight negative numbers now. we think that will bottom out somewhere around the first and second quarter, and reaccelerate through the back half of 13 driven by stagizing global growth, and a pickup in cap-ex. now cap-ex is clearly the weakest part of the economy. we thought it would be weak during an election year. there's a whole body of academic evidence that public policy certainly does impair it. but we were stunned as early as the first quarter of this year to see the tech sector, ibm, talking about flat revenue growth in the u.s., and there we

think there's a level of cap-ex that has just been foregone because of this public policy uncertainty that, even in a semistable environment, it should rebound a bit. and that could be a big driver for profit growth in '14. >> you point out that your sector positioning, you say it's cautious, but you are upping technology to overweight. underweighting domestic cyclical. if cap-ex is a phenomenon next year why would you not be more highly leveraged to that? >> well, we think that first of all, the numbers, and the valuations, look fully played out. we think they still have housing market euphoria. and, have looked at things like consumer confidence going up, at least until friday, as a result of house prices stabilizing. for us, that's the reason why the savings rate dropped from 5.5% in the first half of '11 to 3.75 in the second half of '11. we're now at 3.4% on the savings rate, income growth is really

slow. yet if you look at earnings estimates, where consumer discretionary sector for retailers, media, we're looking for 13% to 15% gains next year and we just think that's entirely implausible in an environment where labor income growth is weak, the savings rate is low, and the housing market, while helping confidence, the consumer just doesn't have the firepower to increase the level of consume shun so that part of the market looks like it's really overpriced and the estimates are too high whereas the capital spending parts look like the numbers have come down almost enough, particularly in tech, they have come down enough where we can get a healthy rebound. >> interest being. among the advantages you think the economy has next year, obviously a huge tail wind. you mentioned favorable demographics, but vastly improved manufacturing competitiveness. is there something specific that you mean? >> sure. there's been a number of studies

about how over the 20 years or so of wage disinflation we've had in this country, along with wage inflation in china, the fact that we have flexible labor markets, our manufacturing sector particularly in some of these right-to-work states, all end productivity and transportation costs adjusted it's virtually a push to manufacture at least not high labor intensity products in the u.s. versus china. >> right. >> so consumer electronics, plastics, fabricated metals -- >> the president's in michigan today with extension from daimler. >> no, that's right. ironically michigan might vote to become a right-to-work state which could help their manufacturing competitiveness, as well. but thatroceeen going on for 20 years. now, look, we think we probably need to cut the corporate tax rate and have a territoriality agreement so we stop trying to tax profits of u.s. domiciled countries twice. but if we can do those things we think manufacturing will start coming back. it's not going to really happen in a major way in '13. but you know, '14, '15, these

benefits will start to accrue to the economy and if it looks like there's a real strong case for a pickup in earnings growth, in '14, then the market will start to price that in the backup of '13. >> we spend so much time talking about what's going to happen in washington over the next 20 days. it's nice to actually have a conversation about what will happen in the next twelve months. brarry, thank you so much. >> i had to force myself to do it. >> barry knapp at barclays in new york. thanks, man. where's the love for the twinkie? today is the last day for investors to make a run at hostess. hundreds of buyers are reportedly interested. but not necessarily in the snack cake you'd think. we'll tell you which brand is actually attracting the most attention. a little bit later on the business of monetizing humor, how cheez burger is turning funny pictures of cats into millions of dollars and a reality television show. we're back after a break. [ male announcer ] citi turns 200 this year. in that time there've been some good days.

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on "halftime report." carl, looking forward to that, as well. >> that is not fair, scott. we should have had that guest. we'll see you in a few minutes. today marks a key deadline in the hostess bankruptcy saga. it is the official drop dead day for buyers to get a seat at the table. kayla tausche is back with more. >> it's an interesting story. with hostess having a going out of business sale, potential buyers are circling what they call a once in a lifetime opportunity, those iconic brands available relatively on the cheap. today is the deadline for those companies which range from snack food giants to supermarkets to private equity companies to submit initial bids or just expressions of interest in the various hostess brands. in all they have about $2.3 billion in sales. advisers are hoping to fetch half that in proceeds for the brands. conventional wisdom would tell you that the twinkie is the biggest sale. the highest priority for hostess is selling wonder bread, since

consumer's bread choices are more prone to quick changes in taste and preference. wonder bread also has about $500 million in revenues which is actually nearly five times what twinkies sell in a year. i'm told some 160 parties have expressed interest so far, but only a few dozen are actually expected to bid. food companies like flours foods have taken a look, vendors like kroger and walmart, also could be interested. metropolis andco which owns pabst blue ribbon is still doing early due diligence. but i'm told a company previously thought to be interested in buy being the whole company, we should have a sense, carl, later this week as far as what the future of some of those hosess brands will be. >> how competitive do you see this business getting? >> i think it will be really competitive. you know bankers and people involved in some of these auctions like to play up the level of interest. but in this case, you can't imagine life without the twinkie. everyone knows what's going on right now. you imagine that a lot of these

companies have been eyeing twinkie for awhile. now you get it on the cheap. i think a lot of people will be interested in that. >> just the marketing you got for free in the wake of the bankruptcy alone. >> right. >> has made it more than an icon than it already was. although the pabst blue ribbon/hostess combo does sound a little bit strange. >> it sounds a little funny. interesting, carl, there are some average joes out there, a guy don sheridan from wellesley, massachusetts, who wrote a letter in cursive on loose-leaf notebook paper saying he should be allowed to bid. everyone wants a piece of this. it's probably going to go to one of the big corporate giants. >> thanks so much, kayla tausche back at hq. >> you know those cat photos with funny captions that seem to be all over the web? what if we told you those photos are helping to create a multimillion dollar media empire? if you're skeptical, don't be. the founder and ceo of cheez burger is going to tell us just how he's done it in just a moment.

tweet time this morning. i don't know if you saw mcdonald's november sales this morning. pretty good. getting a boost from the cheddar bacon onion sandwich. we're asking you what's the next menu innovation that could help propel mcd to success? next would be the i-burger with lte. mcho ho's, mctwinkies. a happy meal with rise above pins. we're doing some lull work right

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its user-submitted images of cats with quickie captions. and it's no laughing matter. the company has raised $32 million in investor capital to go along with their 2 million page views each day. and now, they're venturing into television with a new show on bravo. sounds like a purr-fect combination to us. >> ben hill is the founder and ceo of media company cheez burger network. his company is featured on the show lull work on bravo which is owned by nbc universal. and he joins us from ceo this morning. ben, good morning. great to have you with us. i feel like we're almost family in a way because you are now on bravo. by the way, congratulations. >> thank you. >> what's it like? how has having a television show changed the business? >> you know, people who are not spending all their time on the internet can recognize me. that's about it. >> you were a medil grad, which for those of us in journalism

and media, they're all over the place. was it your intent to go into a different line of work. how did you get into this? >> i think i stumbled on it by accident. when 1999, when i graduated the dotcoms were all the rage and i decided i actually wanted to go to internet, where i spent most of my time, instead of writing for newspapers. >> now basically there's an empire. 60 humor sites. 100 employees. i saw that in october you were ranked third among the most visited humor sites tracked by comscore. are there aspirational levels for you? what do you connote sucks is if what you're dealing with right now is not success? >> i want to do something that allows me to write a book that could be a best-seller. i want to lead a very interesting life. i don't want to just have a business for the sake of having a business. i really want to have a great life story to tell. >> speaking of which, right now you're dealing with both an advertising model, which i'm sure there's a lot to wrote about, versus a licensing deal

model. which of the -- give us your breakdown on where they both stand. we've been hearing lately that maybe advertising in the new year is going to take a step back. how does it feel? how does the market feel? >> you know, right now the market is really interesting, because the mobile advertising has to really take off for companies like us to continue 20 grow in the future. the question out there as for mobile advertising has as high of a value as it is on the desk top internet today. right now mobile advertising alone is the vast majority of revenues. licensing is a small fraction. >> and in the meantime you've got some other businesses, as well, in which you would consult with a consumer brand, for instance. can you walk us through how that works? maybe a couple players? >> yeah, so for us it's really about getting them to understand this generation of people who see internet culture and the remixing of content as a gateway to understanding and marketing to an audience. for example we have worked with companies like toyota who have advertisers with us, kraft, big

name brands really trying to understand what do we do with the millennials? people who are shunning away from traditional sources of media and traditional sources of advertising? >> and what are their general misconceptions? when you first had your meeting with them, how much do you have to educate them? what are they doing wrong up until the moment that they meet you? >> you know, we tell them, don't be afraid of the users. don't be afraid of letting users take control of your brand, and making them into something that they can enjoy and love. don't be afraid of having a little laugh, having a little fun. because what they try to do is put brand from the top-down perspective. here's the message we want to send you and we want to control users. but these kids, the millennials are not responding to that. they're going, i can spend my time looking at funnier ads somewhere else or i can spend my time dealing with brands who seem to understand who i am. we want to help brands understand that if you want to embrace the customer you have to trust them, too. >> and part of that involves hearing from them when they're a little critical of you.

you've got to develop a thick skin when it comes to that. finally, you know, ben, we're hearing a little bit more often that venture capital is tougher to raise than it might have been say six months ago, a year ago. is that rue? and if so, what are you doing about it? >> venture capital is the next thing about venture capital is that it has a very serious lag compared to the market. when the market crashed in 2008, all the funds being invested between then and now have been coming from funds that had raised prior to the crash. so the money pipeline has actually been pretty steady for awhile. where we're seeing a little bit of a slowdown is in the series "b" and "c" areas where the capital after the "c" state is a little bit harder to come by because they require big capital and requires market exits, ipos and acquisitions of considerable size for those returns to make sense. >> yeah. ben -- i hope to have you back. fascinating model. and of course, welcome to 9 the family. we'll see you on tv. >> thank you. >> ben huh with the cheez burger network. quick check of the market.